I’ll start this post out by showing you three chef’s knives from my kitchen.

The top chef’s knife is a loose one that I picked up for $0.50 or so at a yard sale more than a decade ago – I’m unsure even what type it is. It’s serviceable, but it loses its edge fairly quickly.

The middle knife is from a Henckels kitchen knife set given to my wife and I as a wedding gift. It works extremely well for most cutting applications and holds its edge for quite a long time without honing. A similar knife retails on Amazon for $47.99.

The bottom knife is a Global chef’s knife, which I received as a Christmas present in 2008. It’s the sharpest knife (post-sharpening), holds an edge almost as long as the Henckels knife, and fits the best in my hand. It’s the best knife I own. It lists on Amazon for $115, currently.

If the Global knife is the best knife and I gave it a score of 100, what kind of score would I give the other ones? I’d give the Henckels a score somewhere around a 92 and I’d give the old knife a score of around 70, with 0 being the worst cutting experience I’ve ever had in the kitchen with a knife.

Now, here’s the big question: if I can get that 70 knife for $0.50, is that 100 knife really worth $115? In other words, if you have something perfectly serviceable for a very low price, is it ever worthwhile to spend significantly more to get a top quality, highly reliable version of the item?

Here are my thoughts on the subject.

Free (or nearly free) trumps everything. In the scenario above, I would go for the $0.50 knife every single time if I didn’t have a chef’s knife and needed one. That’s because the worst case scenario is that you’re out fifty cents. That’s the worst possible thing that can happen. On the flip side, the best case scenario is that you have a knife that meets your needs for many years to come. Given that the best case is very, very good and the worst case isn’t much of an issue, that would be the knife of my choosing. Free (or nearly free) means that the worst case scenario for an item you need is not bad at all.

If you can’t truly articulate the difference between a low cost item and a high cost one (and claims on the packaging or by the salesperson don’t count) then stick with the low cost version. Again, you have to take a look at the worst case scenario for each item. The worst case scenario for the high cost item is far worse than the worst case scenario for the low cost item, but they have similar best case scenarios. If you do not know specifics about the item, stick with the scenarios.

Have some domain knowledge. The more knowledge you have of the items at hand and their usage, the better buying decisions you can make. Don’t just buy a tire and forget about it. Note what tires you’ve purchased and compare how they grip and hold air compared to other tires. Know what suits your needs and understand fully the terminology used when describing a particular item.

Research, research, research. Whenever you spend money, you’re spending the fruits of your labor. The more you know about a purchase, the more effectively you can use your money. It’s always key to remember that the money you have is directly connected to the work you do. If you work at a minimum wage job, every $7 you spend (roughly) equates to an hour of your work. If you can save $50 by researching a purchase for 2 hours, that is very much worth your while. If that same research leads you to buying a much better item at a similar price or a vastly superior one by paying a bit more, then that research time was still well worth it.

Never go into debt for a consumer item. If you don’t have enough money to afford the high end version, then don’t buy the high end version. Buy the basic item that you actually need. Don’t use credit to facilitate purchases that you couldn’t simply make on your own. You’re simply adding a huge additional cost to that high end item, one that alters the best case and worst case scenarios for each purchase significantly. The only debts worth incurring are for your education and possibly for your home.

If you do truly understand the difference and you can afford to pay cash for the better item, then by all means do so. If you can afford the better item without negatively impacting other aspects of your life and you truly understand why the item is better (and, more importantly, why the item is better for you), then purchase the better item.

I think all of this can be tied together with a note about my own experiences with piano playing.

I practice a bit almost every day. I use an old electronic keyboard that sounds a little “off” to me – the reviews of it often chide the sound quality. However, the price – free – is something that I really can’t argue with.

I’ve often looked at electronic pianos, and some of them are quite good. However, the good ones often have prices well into the thousands of dollars.

I know why I would want such an item, and I know from experience and extensive research that such an item would be reliable and of a very high quality. I’ve even been to music shops and tried a few of them.

I haven’t bought one, though. The best case scenario still involves me plopping down a few thousand dollars, and that makes the best case scenario simply not add up to enough to really compare to just playing on that free one in the basement. It’s good enough for me.

Every so often, I’ll hear from a friend or a reader who wants me to point them toward a great deal on a new computer. “My old computer is so slow!” is a frequent refrain from them, and if that’s what I hear, I usually suggest something besides replacing their hardware.

Simply put, the only time I’ve upgraded a computer in the last several years has been due to hardware failure or complete unavailability of applications. A “slower” computer is something that’s absolutely solvable if you’re willing to put a little bit of time into it (and a bit of money for software applications), most of which can be done in the background while you web surf.

More than a few times over the last several months, I’ve responded to such an email by making a big list of all of the things I tend to do to a “slow” computer to restore most of the speed it had when newly purchased. Of course, whenever I find myself writing what amounts to an article more than once, I realize that I should just turn this into an article for The Simple Dollar because, clearly, this information will be helpful to more than just one person.

Most of the advice below applies mostly to PCs. Macs have some minor slowdown issues, but they’re nowhere near as urgent as the slowdown issues that a PC can generate over time; plus, the Mac slowdown issues are usually resolved by applying the things that do apply to Macs from this list.

So, without further ado, here are the things I recommend doing to computers that are experiencing significant slowdown. As with all such software, use these at your own discretion. Read the documentation before you use them and understand the inherent risks in using any form of computer software.

Run a good antivirus scan
One common factor that slows down computer use is a virus or some other form of malignant program running on your computer, gobbling down resources for some nefarious reason. There are a lot of different varieties and flavors of these, so a robust antivirus program running on your computer is a must.

My preferred free antivirus program is Avast Free Antivirus. I’ve been using it for a long time and have had great success with it identifying viruses, particularly after installing it on the computers of friends and family.

Run a good spyware scan
Spyware is the not-quite-as-nefarious-but-still-annoying cousin of the stuff above. These packages usually just cause unwanted advertisements to regularly pop up on your computer, doing things like redirecting your web browser to ad sites or other websites when you don’t want to go there or simply showing you ads out of nowhere.

My preferred free spyware protection program is Microsoft Security Essentials. It does a very good job of identifying and removing spyware and adware from my computer; I’ve not had trouble with either in quite a while. This package also includes an antivirus component, but I prefer the above antivirus package as it seems to catch a thing here or there that Security Essentials misses.

Uninstall unwanted programs
It’s worthwhile to occasionally check your installed programs and remove any that you no longer use. This saves hard drive space, can sometimes remove programs that are staying in memory, and will remove some unneeded registry entries that are just causing a slight bit of slowdown on your computer.

Go to Start > Control Panel > Install/Uninstall Programs (this varies a bit depending on your specific flavor of Windows). You should have a list of programs available to you. Choose to uninstall anything that you don’t actively use.

Run a good registry cleaner
Another element of your computer that can cause slowdown is the registry. In simple terms, the registry is a place where pieces of information that need to be shared between programs is stored. The more programs you install on your computer, the more registry entries your computer has. The more registry entries your computer has, the longer registry lookups take (imagine a dictionary with more and more words in it). Since your computer does quite a lot of registry lookups, an overweight registry can certainly contribute to slowdowns.

My preferred free registry cleaner is CCleaner. It goes into your registry, seeks out registry entries for programs that you no longer use, and removes them. This is a great follow-up to malware and virus scans, both of which can put a lot of false registry entries onto your computer.

Use OpenDNS
OpenDNS is simply wonderful. It provides very simple internet protection and filtering, keeping you from visiting unwanted websites or downloading unwanted software in the first place. I consider it essential in any home where non-”power users” are actively using the internet (in other words, any homes with children in them).

You can find out much more about OpenDNS here, including links to download.

If you do all of this stuff, I’m almost sure your computer will be running faster and it’ll stay that way for much longer. These actions will save you from investing hundreds of dollars unnecessarily in new hardware and allow you to keep using them until they legitimately break down instead of just replacing a computer because of minor software issues.

This year, in addition to my three yearlong resolutions, I’ve decided to take on a series of month-long goals and projects spread throughout the year. Here’s my schedule of projects as they read right now, which covers the first five months of the year.

January 2011: Rearrange my office with shelving
February 2011: Reorganize the laundry room, getting a better laundry system in place
March 2011: Reorganize the garage and closets, identifying stuff for a spring yard sale
April 2011: Plant a great garden and harvest springtime foods (like morel mushrooms)
May 2011: Set up a family computer workstation (and the required rearragements)

I have some vague ideas for the second half of the year, but I haven’t put them all together as of yet.

Let’s take a look at the features each of these have in common.

Each of these projects will take about twenty hours of work (by my estimation) to fully complete. Some of them sound easier than others, but often the easier ones have some additional constraints that will add significant time to the equation. For example, the office rearrangement requires me to dismantle my current (overly large) desk first, which will take time. I also have to move a significant amount of computer equipment, and when the office is rearranged, I have to move some items from the basement to the new shelves.

Each one can be done in small batches, so I’m not required to set aside entire days to work on these projects. My life doesn’t afford me large blocks of time that I can devote to projects like this – it just doesn’t happen. On the other hand, projects that can be subdivided into smaller pieces tend to work very well because I can simply work on the project for an hour here and an hour there until it’s complete.

I want to work on these projects steadily, so setting a clear deadline for myself encourages that. Although I am quite busy, I do want to actually move forward with and complete such projects. Setting a deadline puts me in a position where I consistently put time aside to achieve these goals – an hour here, an hour there, and then they’re completed.

Setting Your Own
Of course, you can do the same thing in your own life. Using monthly goals to accomplish such activities is a great way to keep yourself moving forward on the smaller yet still significant things you want to accomplish in your life. Here are some tactics to use for doing just that.

Make (and keep) a big project list. Spend some time making a list of all of the projects you want to take on in your life. Include everything, from enormous life-changers that could take years to any small thing that you can’t quite accomplish in an afternoon. Once you’ve made that list (I recommend using a word processing program), save the document and return to it regularly, adding new items and looking for things to accomplish.

Create time estimates for these projects. They don’t have to be perfect time estimates, just enough to help you get an idea of how many hours of work it will take as well as any other length requirements.

Seek out projects in the twenty hour range. Generally, such projects are perfect month-long goals for you to set for yourself. They require some significant time, but can be accomplished with an hour or two a day or a few full weekend days.

Come up with a month-long plan of attack. How will you accomplish this goal? What needs to be done each day? Sit down and define exactly what you intend to do and how you intend to accomplish it.

Flip the calendar… and get started. It’s as simple as that. A calendar month is a perfect period and timeline for accomplishing such small goals.

Twenty Ideas
Here are twenty ideas for such projects to get your creative juices going. Good luck!

1. Walk/run 100 miles.
2. Cook 25 meals in advance and freeze them for future use.
3. Thoroughly clean and rearrange a room.
4. Create a complete grocery “price book.”
5. Have a yard sale.
6. Make a “recipe box” containing 150-200 recipes you can just pull out and rely on.
7. Prepare and plant a garden.
8. Air seal your home and improve your attic insulation.
9. Open up an account at PaperBackSwap, then list and ship fifty unwanted books.
10. Learn some basic home repair and fix a few minor problems in your home.
11. Repaint the trim of your home.
12. Organize and host a block party to get to know your neighbors.
13. Attend meetings of several civic groups to see if any click with you.
14. Calculate your net worth and set up a spreadsheet to make it easy to calculate it in the future.
15. Contribute to a large-scale volunteer project, like a “speed build” of a Habitat for Humanity house.
16. Read four books – one per week.
17. Deeply investigate a topic you’ve long been curious about.
18. Prepare a batch of homemade wine or beer (for gifts, if for nothing else).
19. Repaint a room in your home.
20. Find new checking and savings accounts and migrate your banking to them.

What’s inside? Here are the questions answered in today’s reader mailbag, boiled down to five word summaries. Click on the number to jump straight down to the question.
1. Retiring (very) early
2. Pessimism and thriftiness
3. Checking account cushion
4. Cash advance questions
5. Cutting term insurance
6. Handling a lemon
7. Why no political commentary?
8. Frugality or hoarding?
9. Frugality and motivation
10. Self-employment concerns

Over the past week, I’ve been giving some very simple and incredibly informal piano lessons to my two oldest children. My daughter seems to have taken to it the best, as she’s gone from just banging on the keys to playing one at a time and listening to them, not attempting any songs as of yet. My son will start playing a very simple melody, like “Mary Had a Little Lamb,” get frustrated, and bang away on the keys. They both request that we try things on the keyboard a few times a day, though.

I prefer my daughter’s progress, actually. She’s listening to what the instrument can do. We’ll see if their interest continues.

Q1: Retiring (very) early
Here are my stats: I’m 52, never married, no kids. No consumer debt. Don’t own a car (drive a company car which would vanish when/if I quit). Own two homes. Don’t want to sell either property in this down market. The first home could be rented for break-even cash flow. Second is rented with about 600/mo. negative cash flow (This is CA, don’t jump to conclusions yet.) The second house has a guest house which is mine. It could be used as a remote base of operations in the proposed plan. My tenant is 92 and has health issues. I am NOT going to sell and kick him out of his home. The house is in a 55+ community, so I can’t live there as the primary yet, but can use the guest house at will.

When I was growing up, I was deeply inspired by a friend of mine’s mom. Upon her husband’s untimely demise, she received enough insurance money to either pay off the house or travel throughout Europe with her 3 kids for a few years. Remarkably, she chose to travel with her children! I met them after they had returned from their years of travel. They were the most wonderful, well-adjusted family, and though we’ve long lost touch, I remember them clearly to this day.
- Melinda

The things you describe certainly can be done, but they’re typically done by people who have a significant amount of cash in the bank with which to weather any storms that come their way. I’m not convinced that you have enough cash to pull it off.

Look at it this way. Let’s say you do this for five years. You’ve bought the vehicle. You’ve rambled around for a few years. You’re now 57. Your emergency fund is going to be mostly gone.

To put it simply, you’re probably going to have to return to the workplace at that point. You’ll own a house, but it will have utility bills. You’ll own an aging RV.

Will you be able to return to the workplace at that point with a job that pays $80,000 a year? At age fifty seven? It depends on your field, but I would never bank on that.

I think you’re in a good place to retire early, but today might be a bit too early. Give it a few more years. Consider what you’ll do if the money runs out.

Q2: Pessimism and thriftiness
I enjoy reading your column and have a question that your readers may enjoy commenting on. I was raised by parents that were a product of the Great Depression. Until the age of thirteen I lived in a small three bedroom house with six family members until my dad built a beautiful five bedroom house with a neighbor and paid it off the next year. “Use it up, wear it out, make it do, do without” was engrained in all five children. We all graduated from college debt free and have lived like our parents with great success.

Am I becoming overly cautious and pessimistic because of my personal thriftiness? Is there ever a time that students should take on deep debt for a four year degree? (I’m not talking about graduate degrees.) I don’t want students to limit their potential and am a firm believer in re-invention, but I also don’t want them to be a slave to debt.
- Nancy

I don’t think your thriftiness is causing your pessimism. However, it might be that your thriftiness is an outgrowth of your pessimism.

For me, thriftiness is a tool that leads to a more optimistic place, not a pessimistic place. Thriftiness makes you more able to deal with the hands that life deals you. I think, to some degree, thriftiness is a reflection of your worldview.

Most people have an overabundance of optimism when they’re young. Don’t stunt it – instead, channel it. Tell them that they can major in whatever their heart desires, but that their post-college life will be much, much easier if they live as cheaply as possible during college. Enjoy what the campus has to offer instead of spending money on “stuff.”

Q3: Checking account cushion
How much money do you keep in your checking account? Once all the bills are paid, of course. I am trying to decide on a “cushion” amount.
- Kay

I usually keep an amount equal to roughly a month’s worth of bills in my checking account as a buffer. The rest resides in savings.

Mostly, this is just a protection against miscalculations and simple mistakes, like my wife and I both making simultaneous withdrawals or minor unexpected expenses. The value of having a big enough buffer to ride through these things without an accidental overdraft is worth the tiny loss in interest from not having more of this buffer in savings.

How much should you have? I think the real answer is “as much as you need to feel completely comfortable.” If you feel nervous or worry about not having enough buffer, by all means, have more buffer. An extra $200 in your checking account over the course of a year is going to cost you $3 or so in lost interest – interest that you’d also have to pay taxes on. That small amount is well worth eliminating a worry.

Q4: Cash advance questions
I received a promotional offer in the mail for a cash advance with 0% apr until Oct of next year, about 9 months. Would it make any sense for me to to take this money and because I don’t necessarily need it, put it into a high interest account and just pay it back before the apr kicks in? This way, I would make interest on someone else’s money without having to pay a high interest rate.
- Joe

You can do that – the technique is usually called “credit card arbitrage.”

The problem with it is that it’s not very much reward for some significant risk. The risk comes in the form of your own behavior. If you just let the account sit there for months, you have some likelihood of forgetting about it, then finding yourself with a fat interest bill at the end of the term. I’d make absolutely sure that you’re not going to be liable for any interest if the 0% advance period expires and you haven’t repaid the loan.

Let’s say, hypothetically, that you would borrow $1,000 doing this. You’ll find, at best, a 1.5% interest rate in a savings account right now. That will earn you $15 for your efforts. At the same time, you’re increasing your identity theft risk and giving yourself some more accounts to manage. That’s not worth it to me.

Q5: Cutting term insurance
I am a 46-year-old, single female putting myself through college. I’m trying to cut expenses. In 2002, I took out a 20-year term life insurance policy for $250,000 at $36 monthly. I only have one child left at home who is now 20. Can I discontinue the policy now that they are all adults? Or maybe just lower the amount? Can this type of policy be used to pay off a home loan in case of my death?
- Nancy

Yes, that money can be used to pay off a home loan in the event of your death. Whoever you willed the home to will become responsible for the mortgage on the home. If that person is also the beneficiary of your insurance, they can use the money to pay off the mortgage.

Often, in order to lower the amount of a policy, you’ll have to get a new policy and allow the old one to expire. Given that you’re older, you might not save too much in that process, depending on your health.

The question of whether or not you should reduce your insurance amount depends heavily on how much you still owe on your home and whether someone would use it for a residence (like your child that is still at home). I would not completely eliminate all life insurance as there will be funeral expenses in the event of your passing.

Q6: Handling a lemon
My daughter purchased and financed her first used car through a dealership on 12/22 , I co-signed the loan for her. She went out of town to purchase the vehicle so this dealership is about a two hour drive from our home but still in our state of Louisiana. The vehicle had an implied warranty and she also purchased an additional warranty to cover parts and labor. She drove the car home on the 22nd then drove the car on the 23rd then on Christmas Eve she noticed it had leaked an enormous amount of oil and would not even start. Since it was so late on Christmas Eve and the next day was Christmas and the day after was a Sunday (dealerships closed on Sunday’s in Louisiana) we waited until Monday and contacted a tow truck to pick up the vehicle and move it to the closest GM dealership. We were told when she purchased the vehicle that any GM dealership can service the vehicle.

My question is what recourse do I have? The car was purchased and drove one day then quit and now we’re being told the warranty might not be any good for another 30 days! Are there lemon laws for used vehicles in Louisiana? We just want the vehicle repaired and don’t feel as though we should have to pay for those repairs. Your input on this matter would be greatly appreciated.
- Peggy

Whenever I hear of an obvious “lemon” car purchase like this one, I encourage people to go to carlemon.com, which is a good clearinghouse of information about how to handle a “lemon” purchase.

If you are unable to reach the dealership within a reasonable amount of time, I would contact a lawyer in Louisiana. Pointing the lawyer toward that website might be of use, since it does contain the text of Louisiana’s “lemon laws”.

One of the first things I would do is make sure I had a copy of the warranty issued by the dealership. Without that, it may be hard to prove that you purchased a car with any type of warranty on it.

Q7: Why no political commentary?
I am curious as to why you refuse to comment on well documented cases of national fiscal hypocrisy, such as (several links that I excised). Given your willingness to comment on sports, I honestly don’t see why you fail to comment on these issues, given their importance for the financial future of the country (as well as for the future of Social Security, which will be applicable to every Simple Dollar reader).
- Brent

I comment on sports occasionally because sporting events (from a fan perspective) are fun. Few sports fans get enraged because someone else is a fan of another team (outside of hooliganism); instead, it’s good-natured joking around and enjoyment of a shared interest.

Politics, on the other hand, is a no-win game, particularly in an era where there is blunt refusal to even listen to someone else’s political perspectives. A comment on anything vaguely political quickly dissolves into a left-versus-right battle with vicious and acidic diatribes coming from both sides. Even a mere statement of fact is immediately weighted with interpretations and accusations of bias. Try reading the comment section of any political blog – and trust me, the moderators on such site are out in force knocking down dissidents and flamers and trolls.

My interest in politics is local. I have very little interest in national (and even in state) politics at this point. My focus is doing what I can to make sure I can handle anything that may come, mostly in terms of building and preserving my own skills and having realistic assets for the long term. I have no interest in commenting on national politics much at all aside from when they directly affect personal finance, and projections about the future of Social Security do not fall into that. They fall into yet another pawn in the never-ending political war between the left and the right, and any comments I would make about the future of Social Security will completely change with the policies of whoever is elected next.

Q8: Frugality or hoarding?
Now that I and my siblings are adults (or nearly so), my parents are starting to think about downsizing to a smaller house. The problem is that they have a bit of a hoarding problem. While it’s not as bad as some of those cases you see on tv, there are still piles of things all over the house, boxes in corners, and generally no clear surfaces anywhere in the house.

I don’t know how to help my parents see that by keeping some of these things, they’ve crossed the line and gone beyond frugality. Do you have any suggestions? Articles I could send them? Things I could do?
- Sarah

Hoarding is the result of people failing to realize that possessions have a cost until the weight of those possessions is overwhelming.

What do I mean by saying that possessions have a cost? Each thing you own requires some amount of storage space. You’re paying rent or taxes or mortgage payments on that storage space. The more stuff you have, the smaller your livable space becomes and the larger portion of your taxes and rent and mortgage payments go to paying for a space just to keep your stuff. Each item you own also has a time cost, meaning the time you spend cleaning it and taking care of it in order to preserve whatever value it has.

Take an old boardgame. It costs some amount to store that board game, even if it’s just a cent or two a month. That board game also takes time, in that you’ll eventually have to move it (if nothing else), clean around it, etc. Is the presence of that board game repaying that financial cost and that time cost to you?

Hoarders tend to place more value on the future than is realistic. They believe that an extremely vague “someday” has some sort of value that counterbalances the cost of keeping an item. I think of my own father, who has some hoarding tendencies. He has more stuff stored around his property than he will ever be able to use. He’s actually erected additional sheds to hold all of this miscellany, and all it does is accumulate.

If hoarding is becoming a problem in someone’s life, they need to seek therapy. However, it sounds like it’s not a problem for them at this point. Your best approach is to simply talk to them about the cost of their items, both in terms of time and the space they take up, and then compare that to the value they’ll ever get from a broken-down board game.

Q9: Frugality and motivation
How do I (or is it even possible) get someone motivated about saving money and being more frugal?

A little background – My fiance and I are pretty different when it comes to money. I’m the saver, and he’s the spender. I’m all about the future, and he is more about the present. He has changed a lot after we got together, and now that we are saving together for a wedding, he has definitely cut back on most of the big spendings. But I get very bothered by the fact that he speaks of saving money and of eventually buying a house, and verbally, we are totally on the same page as to what we want for the future, yet he is always wanting to eat out (I do try to cook at home), to look and perhaps purchase the latest gadgets (he’s switched cell phones 3 times in 2 years and has gotten a macbook and ipad), and to go on vacation. The latte factor could definitely work on him – he has a gold card from Starbucks which goes to show how much he frequents it. Also, his last job had really good pay but not the current one, so that may also contribute to the spending habit. I’m not sure if I am just giving him too hard of a time or if there is just some thing I am not doing right. Do you have any advice?
- Linda

Take it slowly. Your partner is not going to change overnight.

It sounds as though on some level he does understand the importance of saving, but has yet to connect the idea of saving to his day-to-day actions. My suggestion would be to do an annual budget. Start off talking about your basic things you need (basic shelter, food, clothing) and subtract that from your income. Talk about what you could do with the money that’s left – how long would you need to save to reach your goals?

Then start adding in all of the extra stuff. How much has he spent on gadgets in the last year? Let him see how those gadgets make the goals further out of reach. Do the same with the Starbucks habit. Do the same with the cell phones. Figure up how much they cost per year, subtract that from what you could be saving, and figure how much time those things are adding to your savings goals.

You might find that Starbucks alone is moving your down payment years into the future.

Examples like this can be startling, as they show the magnification that little things today can have on your future.

Remember that this is the start of a long discussion that will take a long while to come to fruition. Take it slowly and don’t demand that he immediately change to your worldview, or else you’re begging for a fight.

Q10: Self-employment concerns
I’m an independent consultant in the financial services industry. While most have been scrambling to keep their jobs, I’ve had the good fortune to parlay a niche software skill (knowing a vendor’s application) into a successful consulting career. For the past three years, while the industry has been in downturn, I’ve managed to create a very comfortable living in consulting.

What are your thoughts on this? Does it make sense to work for a company or for yourself? Hard to answer but what do you think about the pros and cons as one gets older.
- Vincent

They each have benefits and drawbacks.

One big benefit of working in a corporation is the structure and motivation. If you’re self employed, you don’t have a boss pressing you forward to make progress. Self-employment requires self-motivation – and a lot of it. If you don’t have it, self-employment is going to fail. It sounds like you have that.

Another challenge of self-employment is handling the irregular pay. You have to live at the level of your worst paycheck and bank the rest for the future, particularly if you have a family to feed. If you can’t survive on an income level equal to your worst month over the past year, then you’re not handling irregular pay very well. How would you handle a year at the level of your worst month? Could you handle that? To be able to handle that means that you’re banking a lot of your income as a buffer against the unknown.

At the same time, I think it’s a mistake to put your full trust with regard to your future in the company you work for. Companies can and do discard employees all the time. I have come to view any form of employment as a form of self-employment. You have to look at any job as a contract position in which you want to leverage yourself for the best situation you can be in at the end of that contract. That means not necessarily giving it all to the company, but building yourself up as well.

There is no “best” solution for everyone. It depends on whether you’re self-motivated, financially sensible (especially in terms of spending control), and focused on improving yourself. The more of those traits you have, the better suited you are for self-employment. The fewer you have, the better off you are in a corporate environment.

Got any questions? Email them to me or leave them in the comments and I’ll attempt to answer them in a future mailbag. However, I do receive hundreds of questions per week, so I may not necessarily be able to answer yours.

Every Sunday, The Simple Dollar reviews a personal finance book or other book of interest.

No, this isn’t a weight loss book. The subtitle, I think, explains it well: Love What You Have, Have What You Need, Be Happier With Less.

In other words, Peter Walsh’s Lighten Up focuses on minimalization and living with less stuff in your life, which has a lot of financial and personal benefits.

In large part, his argument rests on the idea that the problem isn’t the stuff itself, but the emotional relationship we have with it. We tie far too much feeling to stuff, resulting in emotional entanglements that leave us wanting more and more stuff, a connection that hurts our finances (for starters) and can damage other aspects of our personal lives. I couldn’t agree more, actually.

1. The Life You Imagine for Yourself
The book opens in the right place: visualizing the future and setting specific goals. One angle I really enjoyed from this chapter was the idea of “for life or from life?” In other words, if you’re making statements like “I need this couch for my living room,” you’re likely focused on accumulation. Instead, focus on things that involve the word “from.” What do I want from my career? What do I want from my friendships? What will I get from this item that actually adds value to my life? It changes the value equation. If you’re getting stuff “for” someone or something else, you’re just accumulating. What are you going to get from it? What are you going to get from a new couch that you’re not getting right now?

2. What Makes You Happy
What in your life actually makes you happy? When are you the happiest? What makes you sad in your life? These questions can help you piece together which aspects of your life lift you up and which ones bring you down. They help you figure out where you should put more of your time and energy and where you should put less. Most people find their happiness comes not from stuff, but from other people and from experiences. Thus, putting more of your energy and time into other people and experiences and less into stuff can only have positive effects on your life.

3. The Personal Audit: Your Life
Walsh spends the middle portion of the book focusing (in turn) on three areas to simplify: your life, your money, and your home. With your life, you’re mostly looking at the ways you choose to spend your time and who you choose to spend that time with. Here, Walsh moves you through something of an audit of your time, evaluating the relationships you choose to engage in and the activities you choose to spend your time on. A big part of this is seeking out the sources of tension in your life. What relationships or activities cause you stress or tension?

4. Create Space for What Really Matters
Actually solving those things sounds good, but so often we fill our lives with excuses for why we can’t be bothered to fix it. Walsh spends this chapter walking through a lot of those excuses, like “there’s no time” or “it’s too broken to fix,” and offers a lot of solutions for getting past those excuses. The big thing, really, is to just let go of the things that aren’t really important in your life. If you fill a lot of hours with things that really don’t matter, then you’re squeezing out a lot of the things that do. Instead of watching TV tonight, place a call to someone that you have a fractured relationship with and mend it, for example.

5. The Financial Audit: Your Money
Here, Walsh does something of a personal finance audit, trying to get a grasp on the true financial situation of a person as well as how a person chooses to spend their money. Most of this stuff is pretty standard personal finance: recording your spending, reviewing how you felt about that spending after you’ve done it, looking at what debts you have, figuring out what you have that you can liquidate, and so on. Although this is useful, I don’t think it’s the reason to pick up the book. If this is your area of interest, read something like Your Money or Your Life.

6. Face the Financials
What can you do with all of that data? It’s usually a call to make some life changes. Look at the things that are offering you a poor value for the money you spend and minimize or eliminate them. Instead, focus your energy and time on the things that give you a high value for your dollar. This can involve eliminating activities and items from your life and it can also involve some significant changes to your personal schedule and your buying habits.

7. The Home Audit: Your Stuff
Here, Walsh turns his eyes to the physical items you have in your home. Your closets. Your decorations. Your overstuffed cupboards. Your garage. All of the places in your home where you put stuff that you rarely use. Why do you have these items? What items are truly valuable to you? We’re not talking about financial worth – we’re talking about the value they add into your life. If something isn’t adding much value to your life, why do you still have it?

8. Change the Way You and Your Family Measure Happiness
These chapters describe a lot of change. It’s a movement from stuff to experiences, from accumulation to enjoyment of what you have. If you do this alone, there’ll be a lot of resistance. The best approach is to incorporate your entire family in this. Have family meetings where you talk about these things. Would you rather have yet another game when you haven’t played the ones you’ve got, or would you rather contribute that money to a family activity? Should everyone spend tonight in solitary activity, or should we all do something together? These are the questions that should be asked.

9. Checkup and Maintenance
It’s great to have a big ball of energy to start with, but every great initiative leaves the honeymoon period and runs into some trouble along the way. The best way to ensure long term success is to plan specific goals with milestones that you can check on regularly. Keeping those milestones and goals in mind every day is the best way to keep this change moving forward in your life.

Is Lighten Up Worth Reading?
This book hits the very topic it claims to hit – it focuses in deeply on accumulation of excess, why people do it, and how they can get past it. If you’re an accumulator, there’s value in these pages.

One particular factor worth noting is that this book includes a lot of self-diagnostic questions that are intended to help you dig through your own situation. Quite often, these seem to exist in books to prove an author’s point, but in this book, they actually are very helpful in terms of being food for thought for the reader that is questioning their relationship between themselves and their stuff.

I found the book to be quite enjoyable (even valuable, you might say) and would recommend it to anyone who has more stuff than they can adequately or realistically use.

Let’s get this straight right out of the chute: your real boss is you.

“Yeah, right,” you might be saying to yourself. “Easy for you to say. You’re self-employed. I’ve got a boss that’s constantly breathing down my neck and a pile of ridiculous demands on my desk.”

Here’s the scoop: you’re making the choice to exchange the time and energy and ideas and patience you’re giving to that job in exchange for the money and the implied promise of more money in the future.

You could, quite easily, walk out that door and work as a gas station cashier or at some other job where you just turn your mind off for several hours, then walk away and just forget about the job when you leave. You’ll earn less money, but you’ll have a lot more energy and patience and ideas for yourself than what you hand over to the company.

“But I need this income!”

Then, in the end, it doesn’t really have much to do with your job, does it?

It comes back to your spending choices. In order to have that house, to have that car, to have that television, to have that furniture, to have that Netflix subscription, you’re trading in your energy and time and patience and ideas.

My belief is this: the people that succeed are the people who invest that energy and time and patience and thought a little differently.

What do I mean?

Option A Let’s say you go to work each day and leave it all on the table. When you leave work, you’re so drained you can barely make it home. You sit on the couch, vegetate for a while, eat dinner, vegetate a bit more, then hit the sack. Or perhaps you’re a parent and you leave work with just enough energy to get through your parental requirements in the evening.

Option B On the other hand, let’s say you go to work and intentionally keep half of your energy for yourself. You give the company 50% of the gas in your tank. After you leave, you spend that 50% improving yourself. You go to night classes. You go to the gym. You go to the library. You go to meetings of professional growth groups, like Toastmasters.

At first, in the workplace, Option A will be the winner. You’ll go to work, set an impressive standard, and produce well for your organization. Option B will look like a bit of a slacker in comparison.

Over time, though, the production of Option B will slowly catch up. The skills and growth that Option B is constantly bringing into your life makes the time you spend at work more productive than before. You know more people. You have more energy. You’ve learned more skills and acquired more knowledge. This all adds to your productivity at work.

At the same time, the production of Option A won’t really change too much. Yes, Option A will hone your specific work skills, but it will lead straight to burnout as well. When you go home at night an empty shell, it’s hard to recharge whatever it is that drives you to success at work.

Eventually, Option B will catch up to – and eventually surpass – Option A in the workplace. Because of the constant addition of skills, energy, contacts, and ideas, the 50% given by Option B will eventually add up to more than the 100% of Option A.

More importantly, Option B’s additional value is tied to the individual, not the company. The successes found through Option A are all tied to the company that the person is working for. The successes found through Option B, at least in part, are tied to the individual. They’re building a wonderful resume for themselves. They’re building a powerful collection of contacts.

The end result is that when Option B moves on to the next step in their career, they’ll be vastly more prepared to find their next step than Option A ever will be.

What’s the moral of the story?

The next time you think to yourself that you don’t possibly have the time or the energy or the focus to do something to improve yourself, rethink what you’re doing. An improved you is a better asset for the company you work for. Dial things back just a touch at work, giving yourself the energy and time you need to improve yourself. Because of that improvement, it won’t be long before the “dialed back” version of yourself is more valuable to the company than the “full bore” version of yourself.

Not only that, you’ll be more valuable as an asset, either to your organization or to another. This leads to greater earnings and more career freedom.

Grow yourself and your career will follow.

Change in another person has to come from within them, not from within you.

One of the most regular themes in emails I get from readers is a desire to somehow change the nature of the person they’re married to. “My husband is uninterested in our finances and just wants to buy more gadgets.” “My wife wants to eat out every night and tells me that the future will take care of itself.”

When people make statements and put forth behaviors like these, they’re acting upon their nature and what they believe about the world. Your husband considers finances to be unimportant and, right now, is passionate about gadgets. Your wife values dining out with you and truly believes that your bright future will take care of any problems that might come.

I understand all of these perspectives because I’ve been on both sides of them. I understand what the first reader’s husband feels like when he’s uninterested in finances and much more concerned with getting new gadgets. I understand what the second reader’s wife feels like when she believes that her future self will handle the problems and that dining out tonight seems like the most enjoyable and reasonable options. And, of course, I understand how both of their spouses feel. The behaviors of their spouses are interfering with the frugality, sensible financial planning, and beautiful future that they envision for their marriages.

How did I turn that page? It’s easy and trite for me to talk about the moment when the “switch” flipped for me, but to be honest, that was just one key moment in a long progression from being a wasteful spender to being someone more in control of their money.

First of all, I had inklings that a serious financial change was needed a year before, at least. It was not an overnight change. It was the result of a lot of observations and thinking about my own life.

If you want your partner to become more financially conscious, make a fertile ground for your partner to think about those kinds of thoughts. Talk about the future in terms of specifics – and how you’ll get from here to there. Whenever you make a purchase, talk about what you’re not getting because of that purchase.

Do not expect overnight change. The journey to financially reasonable thinking can be a very long one. Each time you encourage some positive thinking in that direction, view it as a mere step on a long journey. It could take months. It could take years.

Avoid confrontation. If it starts to be confrontational, change the subject. Most people do not like to have their beliefs challenged. In the end, it has much in common with a discussion between a liberal and a conservative on political issues: once it starts getting emotional, the conversation is nothing more than a shouting match between two people who have no real interest in what the other side is saying, only an interest in being “right” while the other person is “wrong.” When you’ve reached that point, you’re both wasting your time.

Second, even after reaching that tipping point, it wasn’t all smooth and perfect. Simply put, there were a lot of individual bad habits that I needed to disrupt. It was not as if I were immediately a financially wise frugal Zen master when I woke up one morning.

For you, this means be patient, even after your partner is starting to make positive moves on their own. They might be getting it, but then they’ll go buy a gadget or go out for an expensive dinner. Don’t blow up – be patient. Give it time and look for ways to find balance between what you want and what they’re becoming.

Plant more ideas for them. If your partner is a reader, put books like Your Money or Your Life or my own book on their bedside table and let them read the books at their own leisure. Send them a link to The Simple Dollar.

The key thing overall is to be patient and don’t give up on them. A radical change in a person’s perspective on how money and the world works never happens overnight. Instead of expecting a thousand mile journey at once, look for the small steps and encourage them.

Eventually, you’ll have a partner who isn’t merely doing things just to please you and get you out of the way, but making financially wise choices for their own benefit.

I’ve decided to retire the Time Machine series (for now). Instead, I’ve decided to start a new series, highlighting ten things each week that inspired me to greater financial, personal, and professional success. Hopefully, they will inspire you as well.

1. Warren Buffett on long-term planning
Someone’s sitting in the shade today because someone planted a tree a long time ago.
- Warren Buffett, as quoted in The Real Warren Buffett: Managing Capital, Leading People, by James O’Loughlin

Right now is my time to plant trees. For myself. For my wife. For my children. Someday, we’ll be able to enjoy the shade of those trees.

2. Rubiaux Rising by Steve De Jarnatt
This is a short story included in The Best American Short Stories 2009, which I read this week. It tells the story of a severely injured Iraqi war vet trying to escape from an attic during Hurricane Katrina and its aftermath. It made me think quite a lot about what society owes to those that it harms.

3. Ted Williams, the man with the “golden voice”
This week, a video from the Columbus Post-Dispatch went viral:

This man, Ted Williams, has a gift. It’s a mix of a natural voice and some significant training. He made some personal mistakes, obviously, but he’s being given a second chance at life.

Here’s the thing: everyone deserves a second chance, provided (of course) that they make the most of that second chance. We are all raised differently, with different lessons and differing senses of right and wrong. Some of us fall into difficult situations that are almost impossible for even the strongest man to get out of.

This video made me think long and hard about some of the people in my own life that might deserve a second chance.

4. SimpliFried
This is a new blog just launched by my friend Erin Doland. I admire her ability to hop feet first into something completely different (she’s also responsible for Unclutterer, which I link to occasionally), particularly on a topic that’s near and dear to my heart: the integration of food and family.

5. Thoughts on experiences and material things
Instead of leisure being relaxed activity, it was transformed into an opportunity for increased consumption — even consumption of leisure itself (as in travel and vacations).
- Joe Dominguez and Vicki Robin, Your Money or Your Life

I’ve written about Your Money and Your Life many times in the past. Sometimes, when I feel the need for a bit of personal finance inspiration, I flip open the book to a random page and see what I find.

This week, I needed it. I was sitting in the living room trying to decide what to do with several Christmas items and some other stuff that had accumulated. I felt a bit overwhelmed, so I retreated to the office to write for a while.

I flipped open the book and right there, in the middle of the first chapter, was a quote hitting directly upon what I was thinking about.

6. Van Gogh’s Bedroom at Arles

Van Gogh is far and away my favorite artist. Different paintings of his stand out at different times for me. For some reason, this week, I could not get Bedroom at Arles out of my head. Comfortable and intimate and yet so far away. It makes me want to reach for more in my own life.

7. Prokofiev plays “Scheherazade”

One of the four musical pieces I want to work on this year on the piano is a (relatively) simple arrangement of a piano solo from “Scheherazade,” a symphonic suite composed by Nikolai Rimsky-Korsakov in 1888.

Here, Sergei Prokofiev (one of the greatest pianists to ever live, in my opinion) plays a piano solo from “Scheherazade.” This is so far beyond my level that I’ll likely never be able to play anything anywhere close to it, but the beauty of the music and his technical skill inspires me greatly.

8. Why I do this
An email from Heather:

I have meant to send this email to you for many months now. I cannot tell you enough how much your site has changed my life. I was already in the process of trying to pay off my debts when I encountered your website. I signed up for the daily posts via email and I think it was one of the main reasons I was so successful. Having that daily reminder of my goal-to pay off debt and have a healthy relationship with money-was what kept me on track. I also track what I spend and have for the last year and a half. I am now able to start seeing some trends!

Your site and your words made me feel that a change was possible-vis-a-vis the emotional reasons for spending. Not a week goes by that I don`t think of something you have mentioned or am reminded of something that you do, and this invariably helps me to make a good choice when shoppping. (EG. I needed warm waterproof winter boots (I live in Montreal, Canada) and most I had seen were over $300. I found a sale and was between two- one at 25% off 390 and the other pair 50% of 275. I LOVED the 390 dollar pair, but the 275 ones did the job-warm, waterproof, and black (needed to be black for work)). I thought of your post to do with choosing a new ipod or listening device and it helped me make the right choice for me (the other issue that i struggled with was the more expensive ones were made in Canada, while the cheaper in China, but in the end decided that was not enough for me to justify paying the higher price.)

I shall stop rambling and again just say thank you for your words that continue to inspire me.

This email sums up why I write this site/ An email like this makes me want to keep working on The Simple Dollar until my days are over.

There are days when this site utterly exhausts me. I’ll read through a bunch of emails, with half of them being extremely negative and the other half demanding attention to some detail that doesn’t make my heart take off. I log off and go curl up with my kids for a nap and try to forget about it.

All it takes is one or two notes from people like Heather to make it feel worthwhile again. Thank you.

9. Peas and Thank You
A family integrating vegetarian and vegan food into their normal family life has inspired me with my own dietary challenges and integration of those challenges with my own family.

Much thanks to Laura L. for pointing me toward this site.

10. Enough said